GDP revised higher, but prior income revised lower. An overall good spot, without overheating

Last week we saw US GDP revised up for Q1, although the topline number was still relatively tame.

Real gross domestic product (GDP) increased at an annual rate of 1.3 percent in the first quarter of 2023 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6 percent.

The GDP estimate released [Thursday] is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.1 percent (refer to "Updates to GDP"). The updated estimates primarily reflected an upward revision to private inventory investment.

The increase in real GDP reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

As mentioned in my observation about the income and spending report, the growth in wages and salaries was revised down for the last 3 months of 2022. In fact, total wage and salary income in Q1 2023 is no different than what was originally reported for Q4 of last year.

This means income growth has been more moderate than we knew, and that the savings rate is lower. Both are a couple more reasons why the Fed should pause its rate hikes at its nexy meeting in 2 weeks.

Also moderating are the massive profits that corporations pulled in early 2022, as “inflation” recedes from those larger rises in price.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $151.1 billion in the first quarter, compared with a decrease of $60.5 billion in the fourth quarter (table 10).

UW econ professor Menzie Chinn notes that while the general trends show an economy continue to move ahead in Q1 2023 and the first part of Q2 2023, there are just enough flatlines and slight declines to cloud the picture.

Conflicting Signals for Coincident Macro Indicators (incl @NBERPubs BCDC) at End-May: labor market, cons'n, personal inc up in April; but GDO and GDP+ down in last two qtrs @SPGMIFinancials @PhiladelphiaFed @AtlantaFed https://t.co/ZYT8ZHxx3H pic.twitter.com/uDsaGLXmLY

— Menzie Chinn (@menzie_chinn) May 26, 2023

Given the NBER Business Cycle Dating Committee’s emphasis on employment and personal income, one would be fairly confident that no recession was in place as of April 2023, of course keeping in mind all these numbers will be revised over time. GDP in particular will be revised numerous times so an increase in this series would not be decisive in ruling out a recession (just as the decline in 2022Q1-Q2 would not be decisive in ruling in a recession).

We know that reported GDP is actually not the best indicator of where GDP will eventually be revised to. GDO and GDP+ are two series are more likely to fulfill that condition. Here, we see some troubling signs.

While GDP was revised up to 1.3% SAAR, GDO (the average of GDP and GDI) and GDP+ are at -0.5% and -1.2% SAAR, respectively. As Jason Furman has noted, the discrepancy between GDP and GDI is very large, highlighting the uncertainty we face discerning how economic activity trending. This shows up in a discrepancy in the bean counting exercises, with GDPNow at 1.9% SAAR, but SPGMI (formerly Macroeconomic Advisers and IHS Markit) at 0.4% — essentially zero.

If we don't have any monkey business that keeps the debt ceiling from being raised, these are the underlying factors that we can continue to look at to see where the US economy heads for the rest of 2023. Decent spot for now, but we'll see if the consumer can hold up the strong results we've been seeing so far this year.

US spending was strong in April, but incomes weaker at the end of 2022, and savings lower.

After a couple of flat months, Americans resumed spending in April, underscoring a still-growing economy.

U.S. consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month....

"Companies and consumers are in agreement that there are plenty of green shoots to like at the start of springtime and right now the economy is miles and miles away from the cliffs of recession," said Christopher Rupkey, chief economist at FWDBONDS in New York. "Fed officials won't be able to pause their rate hikes, it looks like demand is picking up, not slowing down as it is supposed to do when the Fed hikes rates."

Consumer spending jumped 0.8% last month after gaining 0.1% in March. Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, would rise 0.4%.

It's not always been consistent, but inflation-adjusted consumer spending continues to slowly rise after its immediate post-vaccination bump in early 2021. And January and April 2023 have had noticeable jumps.

Moving over to the income side, there was growth there as well, although in line with the increase in prices.

Personal income increased $80.1 billion (0.4 percent at a monthly rate) in April, according to estimates released today by the Bureau of Economic Analysis (table 3 and table 5). Disposable personal income (DPI) increased $79.4 billion (0.4 percent) and personal consumption expenditures (PCE) increased $151.7 billion (0.8 percent)....

The increase in current-dollar personal income in April primarily reflected increases in compensation and personal income receipts on assets that were partly offset by a decrease in personal current transfer receipts (table 3). The increase in compensation was led by private wages and salaries. The increase in personal income receipts on assets reflected increases in both personal interest income and personal dividend income. The decrease in personal current transfer receipts was led by a decrease in “other” government social benefits.

But to me, another major headline of the income data comes inside of this note from the Bureau of Economic Analysis.

Estimates have been updated for October through March. For October through December, estimates for compensation, personal taxes, and contributions for government social insurance reflect the incorporation of updated fourth-quarter wage and salary data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Revised and previously published changes from the preceding month for current-dollar personal income and for current-dollar and chained (2012) dollar DPI and PCE are provided below for February and March.

The February and March figures aren't changed much from their original reporting, but those updated figures from the last 3 months of 2022 show that wage growth took a step back, and was quite a bit lower than first reported.

On the inflation front, the lower wage growth should offer another bit of evidence that inflation isn't much of a future threat, with wage pressures being even less tbut it also means the US savings rate was lower than originally reported, and now is at 4.1% for April after being reported at 5.1% in March's income and spending - a $200 billion difference on an annual rate.

That's not a good sign going forward, as the consumer may be closed to being tapped out than the overall numbers may indicate. It also helps to explain how we have record-high credit card balances, and with higher interest rates than in past times. But despite the fear-mongering about 4.4% PCE inflation, if incomes are growing by a similar amount, and consumer spending stays slightly ahead of that, does that sound like a bad thing? It keeps demand going while not having cost pressures cause inflation to get out of control. And while the downward revision in wage growth indicates that maybe things weren't as great as we thought for Q4 2022, it also means that we aren't overheating, despite our 3.4% unemployment rate.

And while the media thought the Fed would use the inflation reading as reason to tighten when they next meet in 2 1/2 weeks, I hope they also noticed the lower wage and income figures, and the higher credit card balances. If so, the Fed officials should back off and let things play out for the next few months, if they really want us to have the "soft landing" of lower inflation and moderate growth that would keep people on the job, and OK with where the economy is at.

$2 million for GB for the Draft? Well, Evers wants to put out more funds for more events, so win-win?

Within days of Titletown getting the 2025 NFL Draft, two WisGOPs were asking for state tax dollars to help put on the show.

Two Green Bay-area lawmakers are asking colleagues crafting the next two-year state budget to include $2 million to pay for costs associated with the Green Bay Packers hosting the National Football League draft in 2025.

Rep. David Steffen and Sen. Robert Cowles, both Republicans from Green Bay, said the money would cover a portion of the expected costs to the Packers to host the event, which Cowles and Steffen said could cost $7.5 million overall.

The measure would require the Wisconsin Economic Development Corp. to provide a grant to the Experience Greater Green Bay Corp., according to a draft of the budget motion Steffen's office provided to the Milwaukee Journal Sentinel on Wednesday.

Here's a sense of the type of scale of last month's NFL Draft in Kansas City.

The stage is set and Kansas City is ready for go time! Welcome to the 2023 NFL Draft! #nfldraft #nfldraft2023 pic.twitter.com/yRyYApNYHD

— Union Station KC (@UnionStationKC) April 27, 2023

The NFL Draft in Kansas City will have the largest stage and the biggest screens in league history — a structure the size of a football field.

100,000 people have already registered and the NFL estimates 300,000 total visitors. pic.twitter.com/RU2Hd4mo31

— Front Office Sports (@FOS) April 19, 2023

Interestingly, that story came out a few days ahead of the Joint Finance Committee taking up the Wisconsin Department of Tourism’s budget, which includes a program that Governor Evers wanted to start which would send out similar types of assistance.

Assembly Bill 43/Senate Bill 70 would provide $20 million GPR in 2023-24 and $10 million GPR in 2024-25 to create what would be known as an Opportunity Attraction and Promotion Fund. Funding would be provided in a new, continuing appropriation intended to support marketing, advertising, and outreach to encourage large events to be held in the state, or to secure features of the state in television or film. The bill would direct Tourism to collaborate with the Wisconsin Economic Development Corporation (WEDC) to implement the provision. The bill would also include 1.0 permanent position with funding of $54,800 in 2023-24 and $69,500 in 2024-25 in Tourism's general operations appropriation to administer the program. Funding of $10 million in 2024-25 would continue in the agency base for future biennia.

2. Tourism reports that the Opportunity Attraction and Promotion Fund would be used for the state to bid competitively for hosting rights of large-scale events and attractions, including professional and collegiate sporting events, large-scale festivals and conventions, state-centric features in television and film productions, and other events where travel into the state would encourage visitor spending and state exposure. Tourism cites the following recent events that occurred in Wisconsin and that demonstrate the scale of event Tourism would intend to bid on, or otherwise assist or pair with statewide promotions during the event: (a) major golf events, such the Ryder Cup, which was hosted in 2021, or the U.S. Senior Open, occurring June 27 to July 2, 2023, in Stevens Point; (b) the Crossfit Games, which have been held in Madison since 2017 and are planned to continue through 2024; (c) NASCAR, IndyCar, or other motorsports races, such as those historically held at the Milwaukee Mile or Road America; (d) the National Football League Draft, of which the 2025 event was awarded to the City of Green Bay and the Green Bay Packers on May 22; and (e) the Democratic and Republican National Conventions in Milwaukee in 2020 and 2024, respectively.

3. Tourism argues that such large events could attract national and international travelers, fans, media, and other guests into the state. A large volume of visitors would be expected to increase activity for numerous vendors in the area for the duration of the events. Media outlets that follow and report on large-scale events may provide television and written exposure to the state through normal reporting, also called "earned media."

In addition to those events, the US Women's Open for golf is set for Erin Hills in 2025, and the Bucks recently put in a bid to have Milwaukee host the NBA's All-Star Weekend for 2025 or 2026.

I want to give props to the LFB staff who quickly were able to add this tidbit about the extra costs that the Pack and the GB area will take on in order to host the Draft, and how the state could chip in to help.

It may be that state funding is warranted to assist local destination marketing organizations or other parties who seek large events and productions to be held in Wisconsin. As an example, the efforts to secure the NFL Draft in Green Bay required an agreement between the NFL and area municipalities committing public support to costs such as public works, law enforcement, fire protection, traffic management, and costs of adverse impacts on local businesses. In addition, the municipalities agreed to waive permitting fees. However, the Packers have also pledged $1 million toward an estimated $6 million to $7 million total needed for support of the NFL Draft hosting. State funding could assist municipalities in offsetting certain costs related to hosting such events, to the extent they are not covered by another organizer.

Gonna be a lot bigger than just this.

So given that the Evers Administration wants to put state dollars to attract Big Sports and other national events to Wisconsin, and given that GOPs Dave Steffen and Rob Cowles want to give some funds to help GB and the Packers put on a show for the April 2025 NFL Draft, it seems like we have the opportunity for bipartisan agreement on this.

You know, if the rest of the Legislature actually wants to be serious and not play more games where getting credit is more important than doing things that a lot of politicians on both sides agree with.

Brewers stadium deal has a ways to go. And no Mr. Manfred, it doesn't need to get done soon.

After getting a lot of injuries and quite a few losses in May, the Brewers had a positive start to this week, winning 2 out of 3 from the defending World Series Champion Houston Astros, and still stand in first place as Memorial Day approaches.

Oh, and now Milwaukee is being graced with a visit from the top guy in baseball as the week ends? Cool beans!

MLB Commissioner Rob Manfred says the public must find a way to honor the Brewers' lease and fund renovations the team says are needed.

Just a couple hours earlier, the Milwaukee Co. Board unanimously rejected putting any more money toward the ballpark. https://t.co/OHXvEE0JTN

— A.J. Bayatpour (@AJBayatpour) May 26, 2023

Wisconsin's Legislature and Gov. Tony Evers need to approve a plan to finance $448 million of long-term renovations at American Family Field — or risk the Milwaukee Brewers moving to another city.

That's the message expected to be delivered Thursday by Major League Baseball Commissioner Robert Manfred, who's visiting Milwaukee, a source is telling the Milwaukee Journal Sentinel.

A Brewers representative declined to comment. But the source, who asked not to be named, said Manfred is planning a news conference at American Family Field because of concerns MLB officials have about funding for the ballpark.

OH COME ON! What’s with the hard sell, Rob?

First of all, the Brewers have 7 years left on their current lease with the SE Wisconsin Ballpark District, While I know the super-rich can a;ways break an agreement for the right price, it would be a massive legal pain and cost more than the relatively small amount of money that the team pays the District to play at AmFam Field. Leaving early would be financially suicidal for whoever owns the team.

That veiled threat from MLB about the Brewers’ future also has a little less relevance after this week, as the Oakland A’s and public officials in Nevada seem to have a deal in place to move the team to Las Vegas and build a new stadium, which takes one location off the table that the Brewers could potentially move to. In addition, the Tampa Bay Rays’ stadium situation is more urgent than the one the Brewers have, and MLB plans to add another 2 teams in the coming years, so 2 more potential relocation sites would go away.

Plus, there is a lot in Milwaukee and the rest of the state that needs to be sorted out before we know how to pay for a Brewers stadium, and which communities would pay for it. Assembly Speaker Robbin’ Vos said last month that the City of Milwaukee and Milwaukee County should be part of any assistance that the Brewers stadium may receive.

Vos suggested the package lawmakers ultimately approve for American Family Field could resemble the structure of a 2015 bill that included funding from the state, city and county to help pay for the construction of a new arena for the Milwaukee Bucks, now known as Fiserv Forum.

“I think it's fair to say that most people around the state would expect that (Milwaukee County and the City of Milwaukee) would have some kind of a participatory role,” Vos told reporters in the state Capitol. “Has that been defined? No.”

But we saw that the Milwaukee County Board is saying they don't want to pay anything toward future Brewers improvements, so there's one item that'll have to be ironed out.

More importantly, we have no idea if the City of Milwaukee and Milwaukee County would even have funds available to give toward ballpark improvements. The State Legislature and Governor Evers have yet to come up with a workable increase in shared revenue that would reduce the chances of either of those municipalities from having to make significant cutbacks in services and staff in the next 2-3 years. So I would think that's higher priority to discuss and sort out before we can figure out what the locals can chip in for the Brew Crew.

And it’s interesting that Vos mentioned the Bucks arena as a possible model for a Brewers bill, because a key part of the Bucks arena bill was the development of the “Deer District”, with the City contributing land and TIF-backed infrastructure as a key part of their contribution. But in order to put a “Beer District” on the acres of land associated with AmFam Field and its parking lots, it would require any Brewers funding bill to get rid of a property tax exemption the team has gotten for more than 2 decades, as Bruce Murphy noted last year in Urban Milwaukee.

The Governor’s plan to help pay for repairs to AmFam Field would have continued this tax break, as Dan Shafer noted in the Recombobulation Area when Evers’ budget bill came out.

The governor’s budget proposal also includes a “property tax exemption for baseball park development.”

This would include not only the baseball stadium itself, but also any “retail facilities, hospitality facilities, commercial and residential facilities, health care facilities, and any other functionally related or auxiliary facilities or structures.”....

This would mean any future development the Brewers might do around the stadium would not be subject to property taxes.

The Brewers and the district own the majority of the many parking lots around American Family Field, state and city records show, and two lots located north of I-94 are owned by the state of Wisconsin. The collection of parking lots outside the stadium includes more total parking spaces than that of Disney World’s Magic Kingdom in Orlando, Florida, which ranks as one of the largest parking lots in the world.

Would a standalone Brewers bill allow for some of the lots and land around AmFam Field to be developed and add tax base to the City/County (along with a higher levy limit, maybe?), in exchange for the property tax exemption for that land being dropped? And how much would need to be sent to the Brewers to either buy that land and allow it to be sold/developed, or to reimburse the team for lost parking revenues?

Related, why can’t this Beer District and the nearby area (think Bluemound Road and the related ballpark bars) be part of a special taxing district whose funds go to the ballpark? This is what Minneapolis did to help pay for the new Vikings Stadium and other downtown attractions, which includes an extra sales tax for “live entertainment” in the area, and includes additional taxes on liquor and restaurants in designated neighborhoods and sports facilities.

If we want to make it simple on business owners and the Brewers, we don’t need to have all of these subgroups of taxes, and could do a flat 1-5% sales tax on all non-exempt items sold in the special district along with a ticket tax for Brewers games (similar to the $2-a-ticket tax for FiServ Forum events), and that should go a long way toward the repairs the ballpark will need over the next 20 years.

But unlike how Rob Manfred is implying, we don’t need to figure this out in the next month as part of the debate over the state budget. There are a lot of moving variables on more important issues that need to be ironed out, including whether the City and County that the Brewers play in can even pave their roads and keep cops on the beat.

And given that the team is not going to be leaving any time in the next 5-7 years, we have plenty of time to work out a deal that makes sense for the state, the locals, the team, and the fans. Let’s get this right, as this can be a transformational project that all 4 sides can benefit, and not burden either the state or Milwaukeeans with a huge portion of the costs, without less of a payback for the investment.

Since GOPs only care about debt under Dem presidents, why is Biden wasting time with them?

Chris Hayes had an excellent opening segment on MSNBC Monday night which went over just how absurd the GOP's crocodile tears are on the current federal deficit, and the "Democrat spending" they constantly talk about.

Not only does Hayes mention that Republicans have consistently increased discretionary spending under GOP presidents while trying to cut it when Dems are in the White House, he adds that the real reason GOPs do it has little to do with ideology, and everything to do with sabotaging the economy to hurt the Dems in upcoming elections.

And it includes this graphic, which looks at total US spending over the last 40 years, with GOP presidents shaded, and Dem presidents listed in white.

This includes 2 time periods in the last 20 years when Republicans had complete control of Congress and the White House (Most of 2001-2007 and 2017-2019). And Republicans did NOTHING to cut overall spending, even as they were cutting taxes. Because doing so would have slowed down the economy, and made the GOP look like uncaring bastards when people suffered as a result, and they didn't want that.

Now that a Dem is in the White House, they are singing a different tune. The dopiest of the GOP saboteurs aren't even trying to hide it.

More from Gaetz, who rejects any debt limit compromise with the White House: “I think my conservative colleagues for the most part support Limit, Save, Grow, & they don't feel like we should negotiate with our hostage.”

Default would almost certainly throw US into recession

— Joseph Zeballos-Roig (@josephzeballos) May 23, 2023

Who does Rapey McForehead think is the "hostage"? Joe Biden? The American people who will lose their jobs and 401k values if we default?

Why would we waste our time talking to lowlifes like this? Especially when we have spending levels set through September 30 based on the last US budget, and we have to pay those bills BY LAW. By contrast, the debt ceiling is an IMAGINARY THING. It has no force of law. President Biden should tell House GOPs that he is removing that hostage, invoking the 14th Amendment, paying our bills, and allow Americans to have life carry on as normal.

Why this hasn't been done already is beyond me, except that DC Brain is a real thing with far too many Dems, where they're clinging to episodes of "The West Wing" and a belief in "compromise for the better good" that has been long disregarded by the vandals in the GOP.

Hey Joe, the last 12 years should tell you who these guys are, and the real reason they want to impose spending cuts 4 months before the budget deadline. Why play along and risk dragging the economy and your re-election prospects down, when you don't need to?

GOP Senate isn't on same page as GOP Assembly on shared revenue. We all may be waiting on them

Looks like Republicans have some significant differences to figure out among themselves on this shared revenue bill.

Senate Majority Leader Devin LeMahieu says his caucus will likely drop a requirement that Milwaukee County and the city approve a new sales tax via referendum as part of the GOP shared revenue bill.

That prompted Assembly Speaker Robin Vos to declare such a move could kill the bill.

The speaker’s comments Thursday came a day after he declared Assembly Republicans were done negotiating on the bill and the Senate could take it or leave it. The legislation cleared the Assembly last night, about 12 hours after Dem Gov. Tony Evers said he was optimistic he could reach a final deal on the bill with LeMahieu and Vos in the coming weeks.

LeMahieu was unfazed by Vos’ comments.

“There are two houses in the state Legislature. It’s unfortunate that he’s drawing a line in the sand now with his version of the bill now and stopping negotiations on a bill that not everybody is in agreement on,” LeMahieu said.

In fact, a hastily-called Senate committee hearing for tomorrow deals with the original version of the bill, and not the one that was amended and passed last week by the State Assembly. And that one only allows a local sales tax in both the City of Milwaukee and Milwaukee County if the voters approve of it.

Marquette professor Philip Rocco followed up an earlier analysis by examining the shared revenue bill that passed the Assembly, and says that while there is more money in it than before, it almost all goes to smaller communities. And while some of most idiotic conditions on the funds were taken out, many remain.

While the last-minute changes added brought the total amount of county and municipal aid in the Republican plan up to $311 million, that is still just over half the size of the aid package proposed by Gov. Tony Evers. Moreover, while Republicans deleted several “strings attached” to the aid that attracted public scorn — notably the illegal quotas on arrests and moving violations that were part of the plan’s “maintenance of effort” requirements — the vast majority of the restrictions in the initial legislation remained in place....

The old criteria for distributing municipal aid —which Evers’ plan would rehabilitate— relied largely on “aidable revenues,” a measure based on local governments’ net revenue effort, their per capita property wealth, and population.

In the initial version of their bill, Assembly Republicans’ formula for municipal aid relies exclusively on population, but assigns a slightly larger multiplier to communities with populations under 5,000. The new legislation doesn’t really change that basic structure. But it adds a specific formula for aid to municipalities with between 30,000 and 50,000 residents.

A trade-off for giving Milwaukee the chance to put in a sales tax is that the GOP bill gives the state's largest city the lowest % increase in shared revenue, and Rocco adds that Milwaukee County does much worse under the GOP bills than they do with Evers' original shared revenue bill.

There is something to be said about changing a formula that has largely been based on the same factors for decades. But let's not kid ourselves - the reason the smaller communities are getting bigger boosts in this bill is because Republicans are more likely to represent those areas. Which yet again proves that Republicans care less about how much is being spent as much as they want to send those tax dollars to their communities while not having it go to THOSE PEOPLE in bigger cities that are more likely to vote Democrat.

However, the Republicans in the Legislature still need to figure a bill that works for both the Assembly and the Senate, and they sure aren't on the same page about this bill as it is. And if those two houses can't figure out a bill that works, do we see that bleed over into a long-term budget stalemate, like we did with Robbin' Vos and Scott Fitzgerald in 2017, which kept the state budget from being passed until mid-September?

Given that 2023 Republicans are outright terrible at anything resembling governance, I'm getting skeptical that they can get anything done in the next month, and that this devolves into a intra-GOP waiting game on something that we all agree needs to be fixed. Or if there is a bill, it'll be so inequitable and filled with poison pills that Gov Evers should rip it up and come back with something legitimate.

I understand that beggars can't be choosers, and I'd recommend signing a bill that even put some conditions on Milwaukee and had a small amount of giveaways to cops (I'd tie the sales tax to pensions and public safety, and call it a day). But let's see what comes out of this Senate hearing tomorrow, and in discussions in the coming weeks on this shared revenue bill. I think it's as important as any part of the state budget, but now it seems like it can go a lot of ways, especially now that it is outside of the budget.

What Happened in the 2022 elections? In close states Dems did well, and it looks good for 2024

Wanted to give attention to a great analsys by the Catalist group that gives their interpretation on the results of the 2022 elections. Catalist digs into who actually voted in 2022, and then they use that information along with the results from communities to figure out how various demographics voted in those elections.

The What Happened project involves dozens of staff at Catalist across a range of expertise as well as input from partner organizations with deep experience in data related to specific constituency groups. Team members acquire voter file data from all 50 states and Washington, DC, including local and county-level data, as well as precinct-level election results. Data scientists and other technical experts standardize and process these data across the voter file, including running data through record-linkage algorithms and relating commercial, Census and other data back to voter file records. Using precinct-level voting records, survey data and other Catalist data and models, data scientists carefully reconstruct What Happened in a given election based on all available data, building up from the precinct level and down from national results to build a coherent view of the electorate.

And Catalist uses that information to note that 2022 was basically a "split-decision" election. The overall numbers may have indicated a Republican-leaning year, but not in the races that were up for grabs.

...in 2022, there was no national wave in either direction. Instead, Republicans enjoyed an overall advantage nationally, but Democrats outperformed them in highly contested races, where Democratic turnout and support levels were higher.

In the elections for the House of Representatives, Democrats received 49% of the two-way national vote, a 3-point drop compared to the 2020 election results at both the Presidential and House levels. However, in the most heavily-contested House races — those rated by the non-partisan Cook Political Report as Tossup or Lean — Democrats did much better, winning 40 out of 64 House races. Altogether, this resulted in Republicans winning a narrow 9-seat majority in the House, smaller than many expected before the election.

When we examine only the most heavily contested Senate and Gubernatorial elections, Democrats did slightly better (51.0%) than they did in the 2020 Presidential election (50.5%). As a result, Democrats won 13 out of 18 elections that the Cook Political report rated as a Tossup or Lean, keeping control of the Senate and many state houses.

Which leads to a theory of mine about the 2022 elections - if there were high-stakes involved in the election, Dems did much better. And Catalist offers further evidence of this when they explain what fell into the "Tossup/Lean" category, which includes both huge statewide races in Wisconsin.

While there is no perfect definition of heavily contested races, this analysis relies on the final pre-election ratings from the non-partisan Cook Political Report. We define “heavily contested” elections as those which were rated Tossup or Lean for either party. These analyses include data about redistricting, polling, fundraising and on-the-ground reporting and have a strong historical track record.

These races include 64 House races; Senate races in Arizona, Georgia, Colorado, Nevada, New Hampshire, Ohio, North Carolina, Pennsylvania, and Wisconsin and Gubernatorial races in Arizona, Georgia, Kansas, Maine, Michigan, Nevada, New Mexico, Oregon and Wisconsin.

The analysis also breaks down the election results by age, which gives two ominous signs for Republicans. First, GOPs did even worse with younger voters than they did in the 2020 election, as they were gaining 3% nationwide. And those GOP gains with voters over 45 went away in the close races, which featured heavy spending and lots of news exposure.

And many of those contested states had governor's races where the Dobbs decision on abortion was especially relevant, as a GOP win would likely translate into enforced bans on abortion and other reproductive health procedures. And this is where you especially see a divergence among white voters, as white voters (and especially white women) in the swing states turned toward Dems, while non-contested places saw white voters lean more towards the GOP.

Also relevant in Wisconsin and other swing states in 2022 was the memory of attempts by the GOP to overturn the 2020 presidential election in those states,and the prospect that they would use the 2022 elections as the way of gaining the power to overturn the 2024 presidential election. And Catalist says the election denial was a definite loser in those closely-contested states, as Republicans that pushed election denial underperformed compared to how they did nationwide.

But there is one finding in the Catalist research that should be concerning for Democrats, and is especially worrysome in Wisconsin.

Support. Black voters remain the strongest Democratic constituency by race, with support levels exceeding 80% and 90% depending on state. In heavily contested races, Black voters essentially matched their 2020 support levels, with overall support at 92% in 2020 and 91% in 2022. Nationally, however, when accounting for states with no heavily contested elections, Democratic support among Black voters fell, dropping from 91% to 88%.

Turnout. Turnout among Black voters also fell from the past midterm, relative to other groups. While we don’t explicitly estimate the turnout rate due to changes in Census data on eligible voters, we do see that the percent of voters that were Black decreased, both nationally (12% in 2018 to 10% in 2022) and in the most highly contested elections (12% in 2018 to 10% in 2022).

Both of these trends hurt Senate candidate Mandela Barnes (a Black Democrat) in Wisconsin, as areas of the state with sizable Black populations had disappointing turnout (especially in Barnes' hometown of Milwaukee). Catalist adds that we had a larger dropoff in Black support for Dems in Wisconsin than we saw in other closely contested states.

Given that a GOP Wisconsin Election Commissioner applauded voter suppression efforts against Black Milwaukee voters last November, and given that state Republicans are trying to overlord over majority-minority Milwaukee with their shared revenue bill and other big-government handcuffs, maybe Wisconsin Dems should push a little harder on some racial issues and stir up a little (rightful) resentment among Wisconsin's Black voters against the GOP. Not unlike how Wisconsin Republicans try to stir it up with white voters against People of Color, except Dems can have actual facts behind those themes.

These findjng are good signs for Democrats in what is sure to be a high-exposure presidential election in 2024, especially if Donald Trump is the GOP nominee. Trumpiness was definitely on the ballot in many swing states in 2022, and Democrats did as well if not better than they did in 2020. And with another 2 years of young voters joining the electorate along with another 2 years of Silent/Boomer generation voters fading out of the electorate.

A Dem win in 2024 is far from guaranteed, but these Catalist findings from 2022 indicate to me that Republicans are losing voters in the places they need to win them in, and given how MAGA types dominate their primary electorates and constituencies in Congress and statehouses, I don't see how they navigate it without alienating even more of their voters.

Republicans push work requirements that don't work

After losing by double-digits in the April elections in Wisconsin, Republicans in Wisconsin and nationwide think there is something out of that vote that they could use to their advantage.

Imagine thinking this is controversial when these were the results in the single most evenly divided state last month… https://t.co/HNGRRFltEh pic.twitter.com/RsJ3JVDTFA

— Chris Olmstead (@ct_olmstead) May 19, 2023

Let's remember that this was an cynical advisory referendum put up by Wisconsin Republicans in the state Legislature, put on the ballot with the sole purpose of pumping up dumb white people to vote for GOP "Justice" candidate Dan KeLLy (didn't quite work, did it?). And it had no force of law in a state where programs such as Medicaid and unemployment benefits already have work requirements.

But national Republicans likely took notice of what Wisconsin voters said about this theory, and given that GOP budget cuts aren't something that Real Americans are in favor of, DC GOPs are using "work requirement" as a central message on their budget talks.

🚨NEWS — MCCARTHY DIGS IN — @SpeakerMcCarthy says the debt limit deal MUST include something on work requirements. He said it’s a red line for him.

Meeting at the White House at 3p today.

— Jake Sherman (@JakeSherman) May 16, 2023

Former UW Professor Donald Moynihan's latest post in his Substack account looks at these types of work requirements, as we have a lot of data from years of having these requirements in place at the state and federal levels for many public assistance programs. I'm also going to include links to the reports that Moynihan references so you can check them out for yourselves.

New, from me: Work requirements are sort of the like Blockbuster. Popular in the 1990s, but pretty outdated today.

Work requirements don't work. So why are Republicans making them a key sticking point in the fight over the debt ceiling. https://t.co/foK8lzy6VU pic.twitter.com/fZEdVdM8PN

— Don Moynihan (@donmoyn) May 18, 2023

Why don’t work requirements have much of a positive effect? First, as the Urban Institute points out: “Most Medicaid and SNAP recipients are already working, could qualify for an exemption, or face barriers to employment.” (Exemptions are tied to disability, and some of those barriers reflect a changing labor market where low-wage workers do not control their work schedules, making it difficult for them to control hours worked in a month).

Second, there are already strong incentives to work. Since welfare reform in the 1990s the US increasingly revamped the safety net to reward work by increasing the value of tax credits like the EITC and the Child Tax Credit.

Third, bad assumptions underpin the push for work requirements. Like the idea that if people get Medicaid, they won’t work. But think about it for a moment. Would you really stop working if you got health insurance? As my former University of Wisconsin-Madison colleague Tim Smeeding would often say: you can’t eat health insurance. In other words, having some basic coverage might provide protection against catastrophic health risks, but it doesn’t do much to make you materially better off in other ways. To eat, you still need to work.

Professor Moynihan adds that in our current jobs market, where we already have low unemployment and rising wages, it is especially absurd to put in "work requirements", as it is chasing a problem that doesn't exist.

Let me caveat this a little bit. Work requirements are especially unlikely to provide value in a white-hot labor market where there are already strong incentives to work. There is some evidence that work requirements increased labor force participation for people on the cash welfare program TANF in the short run, but not the long run, and did little to nothing for SNAP and Medicaid. The TANF effects are also a mixed bag, since kids end up spending less time with their parents who were pushed into the labor market, and were exposed to lower quality care (e.g. fewer reading opportunities) as a result. In other words, if you look at effects beyond labor force participation, you become more leery about compelling single moms to work.

Want better labor force participation? Invest in human capital. Giving families basics like food and health coverage moves them from a place of scarcity, making them more likely to be prosperous in the long-run. As the Urban Institute notes:

If the goal of work requirements is to increase employment, expanding access to Medicaid itself is likely to be a better way to reach that goal. Adults who gained Medicaid under the Affordable Care Act reported that improved access to health care was critical for their health as well as current and future employment. Ultimately, work requirements in Medicaid would do little or nothing to encourage people to work but can cause significant harm to their health.

So if Robbin' Vos and the rest of the WisGOPs in the Legislature want to get THOSE PEOPLE (whoever they are) off the sidelines and staying in the work force, expanding Medicaid in Wisconsin would be a great way to do that, since it is less likely to tie health insurance to someone's job, and keeps them healthier and more available to work.

But then that would give lower-income people more choices, make them more likely to command higher wages, and less likely to be a destitute scapegoat to misdirect the anger of mediocre white people. And we can't have that in WisGOP World, now can we?

It also destroys another theme that Republicans of my youth used to give, as now it is the GOP that is the party of big government, red tape, and inefficient governance. And this push to impose paperwork intended to screw over "work requirements" on lower-income Americans is merely the latest example of this.

3 million jobs! 2.4% unemployment! How can we improve on that?

There were a couple of big milestones in the Wisconsin jobs market that got revealed this week.

he Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of April 2023, which showed Wisconsin's seasonally adjusted unemployment rate dropped to a record low of 2.4%.

The total number of unemployed people dropped by 3,700 over the month of April and 13,300 over the year to a new record low of 72,900. In addition, total seasonally adjusted nonfarm jobs increased 3,800 over the month of April and 51,500 year-over-year to hit a new record high of 3,003,600. The total jobs number puts the state 9,600 jobs above the pre-COVID-19 peak in January 2020.

Wisconsin's record low unemployment rate of 2.4% for April is down 0.1 percentage points from the March rate of 2.5%, which was the previous record low. The state's labor force participation rate increased by 0.2 percentage point over the month to 64.8%. Nationwide for the month of April, the U.S. unemployment rate was 3.4% with a labor force participation rate of 62.6%.

3 million jobs in Wisconsin!!?? First time ever for that one, and first time ever for a 2.4% unemployment.

That 2.4% unemployment rate also places Wisconsin at the lowest rate in the Midwest, one of the 10 lowest in America, and one of only 2 states out of those 10 with cities large enough to have a major pro sports franchise.

But at the same time, while 51,500 additional jobs in the last year is a very good number, the US job market has been so strong that Wisconsin is down at 40th among the states. That being said, we’re still in the middle of the pack for the Midwest.

This illustrates our challenge in the state going forward, as we pretty much have maximized our work force, and almost everyone in the work force is able to find work. But we only have so many people available, so we can’t add many more jobs.

I included these observations in a tweet I made right after the Wisconsin jobs report came out during my hour on Thursday, and got a surprising amount of response to it.

JUST IN - Wisconsin passes 3 million total jobs for the first time, and reaches record low of 2.4% unemployment, while participation rate rises.

Pretty good spot to be in. Now we gotta make more people want to come here.#wibudget #wiunion #wipolitics

— JakeEdwards (@JakeMadtown) May 18, 2023

Many of the responses to my observation had a common theme - change the WisGOP Legislature and get their regressive garbage off the books.

Women having autonomy over their own bodies would be a good start.

— Andrea (@AndifromWI) May 18, 2023

Gotta get rid of the gerrymandering for that to happen.

— KathleenK (@kakempen) May 19, 2023

Fair maps will get the ball rolling

— ChillyDawgg 🇺🇦 (@DawggChilly) May 19, 2023

And make people want to stay here. We need to go in a different direction than the course set 12+ years ago. pic.twitter.com/ckLVIWEi5g

— WisconsinSOS (@WiscSOS) May 18, 2023

Given that we have a new Supreme Court majority likely to hear cases about our outdated abortion law and the gerrymandered maps alter this year, perhaps we can make some progress on that front, and get a better chance of having a state whose laws match the wishes of the majority of its residents.

And with those changes and fairer maps, we might just get a better chance at encouraging people to want to live and work here, and increasing our chances at further growth instead of having Wisconsin get stuck at the limits that we seem to be at today.

WisGOPs spending big on law and order...to fix their defunding of it.

Hey, who says we can't get bipartisan agreements on added investments in this state?

The Joint Finance Committee voted unanimously [Tuesday] to give state prosecutors and public defenders a pay raise of $8.76 an hour — equal to $18,221 a year — as both fight vacancy rates that advocates say have led to slowdowns in the criminal justice system.

The move also boosted starting pay for assistant public defenders and public defenders to $74,880, up from $56,659.

Backers called the proposed investment historic, while Republicans noted it exceeds what Gov. Tony Evers proposed. His budget called for increasing pay by $7.76 an hour for prosecutors and public defenders....

In all, the package would increase funding for the district attorneys by $21.2 million and for public defenders by $36 million.

It's a move that's long overdue, as there have been numerous news reports about the inability to both pay and keep prosecutors and public defenders, largely because the pay isn't close to keeping up with the big bucks in the private sector.

It's also key in getting those positions staffed up so that cases can be pushed through the system, and that there is a shorter time period between arrest and trial. Which helps explain why Republicans would step up to spend even more tax dollars than Governor Evers wanted to.

Another item Republicans have no problem spending tax dollars on? Police, including this part of the WisGOP Shared Revenue bill that may as well be called the Protecting Police Jobs Act.

Still lots of strings attached in GOP legislation. Local govts risk cut to all aid if they do not exert same amt of expenditure effort on law enforcement. But (illegal) arrest quotas and moving violation quotas are gone. Instead "effort" indicators are $ and # of officers

— Philip Rocco (@PhilipRocco) May 17, 2023

Well at least the arrest quota part is gone, but it would be nice if Republicans felt like making investments in programs and infrastructure that would lessen the chances of crime happening in the first place, and lessen the need to spend all this money on policing. Or even allowing a community the fiscal ability the same, if they so choose.

It's also interesting how WisGOPs are now "pay any price, impose any burden" when it comes to policing and the local court system, because as Dan Shafer of the Recombobulation Area points out, it is Republican policies that are a big reason behind this "crisis" that has prevented local governments from being able to maintain adequate funding for these responsibilites.

We're in this problem where shared revenue is broken because a certain political party did the breaking.

Look at this chart. This shows that >250 Wisconsin municipalities cut their police budgets in 2018 and 2019 -- before 2020 and "defund." https://t.co/ihq2614lnz

— Dan Shafer (@DanRShafer) May 17, 2023

New Wis revenue figures also fall short. But there's still billions to work with.

I had mentioned that recent news of lower-than-expected US tax revenues during tax season combined with similar lower numbers in the state's checking account might well mean that the state of Wisconsin wouldn't maintain the lofty projections that came out earlier this year.

That prediction turned out to be true today, courtesy of the Legislative Fiscal Bureau.

On January 25, 2023, this office distributed its estimates of general fund revenues and expenditures for the 2022-23 fiscal year and tax collection projections for each year of the next biennium. Recently, tax collection data for April, 2023, became available and S&P Global released its May, 2023, forecast of the national economy.

Based upon our review of the collections data and the new economic forecast, we believe that tax collections will be lower than the January 25 report by $365.2 million in 2022-23, $148.0 million in 2023-24, and $241.9 million in 2024-25. The three-year reduction is $755.1 million, or -1.16%.

And like we're seeing at the Federal level, low income tax figures and especially a lack of capital gains are a reason behind the lower estimates.

Individual Income Tax. Total individual income tax collections are estimated at $9,450 million in 2022-23, which represents a decline of 1.7% relative to the January estimate. Growth in year-to-date adjusted withholding collections through April, 2023, relative to the same time period a year prior (-5.9%), is significantly lower than forecast in January. Year-to-date through April, final payments made by taxpayers for tax year 2022, and tax amounts withheld from nonresident members of pass-through entities, are both considerably lower than the forecasted level in January. However, adjusted withholding collections (not including pass-through withholding) are expected to grow by 7.2% over the rest of the year, buoyed by strong near-term projections for wages and salaries.

The January forecast included an assumption that capital gains realizations would decline significantly in tax year 2022 relative to tax year 2021. It appears that this trend has impacted 2022-23 estimated payments as anticipated, which are 16.8% lower through April than the same period in 2021-22. As in January, these estimates assume capital gains realizations will decline further in tax year 2023, and begin to rebound in tax year 2024.

That being said, the LFB also said expenses were going to come in lower than estimated for this year, and that there will still be billions in the state's bank on June 30.

Although general fund tax collections are estimated to be $365.2 million below the previous projection, that amount is offset by anticipated expenditure reductions of $141.7 million above those of our January report. The $141.7 million consists of a reduction in debt service payments ($8.5 million), a lapse from the appropriation of the State Public Defender ($9.7 million), and an increased lapse of $123.5 million in the GPR appropriation for the Medical Assistance (MA) program.

The net result of these estimates is that the projected gross balance in the general fund for 2022-23 will be $6,877.0 million, which is $223.5 million lower than the January projection of $7,100.5 million.

It's a big jump from 2022's already-huge balance, and reflects 2 straight years of much larger revenues than expenses in the state.

And even with the lower revenue estimates, under the base spending budget (which assumes no additional population or additonal costs/needs in current programs), revenues would still be slated to exceed expenses, and add to that cash balance. But that also means no tax cuts, and no added investments to make up for the end of COVID-era aids from the Feds, or higher costs due to inflation.

With that in mind, Governor Evers asked to expand state spending for schools by well over $2 billion vs the base levels in the 2023-25 budget, and also allocated a lot of one-time money for needs such as state building projects and roads (instead of borrowing for them), expanding broadband, and adding to the state's already-large Rainy Day Fund. This would have raised state spending well above the base levels, and the budgeted amounts of revenues.

When combined with these lower revenue figures, Evers' plans would have removed all of the billions that were in the budget, if all items were approved of.

Of course, Republicans removed many of Evers' initiatives from the budget earlier this month, and likely will reduce a lot of the added funding that Evers is asking for in current programs in the coming weeks. But you can see that there is still $9.5 billion to play with, even under the lower revenue estimates, and there should be room for some tax relief, some increase in shared revenues and other local assistance, and an ability to make significant investments to make up for the neglect of the Scott Walker era.

You know, if we had a Legislature that was willing to work with the Governor and improve this state's competitiveness instead of playing silly games and sucking up to their donors. We'll see if the threat of fairer maps can make GOPs in the Legislature be more serious with their counter-offer, but while I was born at 10pm, it wasn't last night, so I won't count on much.

US budget deficit growing larger now and later. Like when we raised the debt ceiling under Trump

As the hostage standoff known as the debt limit debate continues in DC, there were a couple of ominous releases from the Congressional Budget Office that indicated action would need to come sooner. The first involved a release where the CBO mentioned that if some action isn't taken on the debt ceiling, bills will stop being paid in the next few weeks.

The nonpartisan Congressional Budget Office on Friday added more urgency to the fight over the debt limit, now saying there is a "significant risk" the U.S. will default on its debt "at some point in the first two weeks of June."

In a new report, the agency said "the extent to which the Treasury will be able to fund the government's ongoing obligations will remain uncertain throughout May, even if the Treasury ultimately runs out of funds in early June."

This is an escalation from agency's previous assessment of how soon the government won't be able to pay its bills. In a May 1 blog post, the CBO warned of a greater risk Treasury would run out of funds in early June, while in February the CBO targeted July as the month where the U.S. would no longer be able to meet its obligations.

And on Friday, there was another CBO update from February's assessments, with another analysis of the US's budget outlook over the next 10 years. And while the overall deficit picture wasn't much different than what the CBO had 3 months ago, it is larger than what was expected a couple of years ago.

Worse, the CBO indicated in its report that these figures didn't account for the revenue shortfall that we saw in April, which has sped up the "X-date" for the debt limit.

This report updates CBO’s budget projections released in February 2023. The updates to the projections of outlays reflect numerous technical changes, including those that take into account new information released with the President’s annual budget request and other information available as of March 30, 2023. Updates to projections of revenues are more limited: A comprehensive revision of revenue projections is typically based on an updated economic forecast; the projections in this report are based on the economic forecast the agency published in February.

The Budget in 2023. CBO’s current projections show a federal budget deficit of $1.5 trillion for 2023—which is $0.1 trillion more than the agency estimated in February. The estimate of the 2023 deficit is subject to considerable uncertainty, which has grown more apparent since late March, when the updated projections were finalized. Since that time, CBO has learned that revenue collections through April were less than the agency expected, which could affect total revenues for fiscal year 2023 (which ends on September 30, 2023). Outlays also could differ significantly from CBO’s projections, most notably depending on the outcome of a case currently before the Supreme Court regarding the cancellation of outstanding student loan debt.

And US tax revenues were already falling in previous projections, as the COVID and stimulus boom wore off, the stock market declined in 2022, and higher 2022 inflation caused a back-door tax cut this year due to the indexing of tax brackets.

And that revenue shortfall is a large reason why the deficit has had a significant increase in Fiscal Year 2023, although it is nowhere near the depths we had in the COVID-related Fiscal Years of 2020 and 2021.

But also see how the deficit was growing in 2019? Back then we also had a divided Congress, except it was the House that was run by Democrats and the Senate was controlled by Republicans, and we were also approaching the debt limit as well as a budget debate that Summer.

So why didn't we have a debt limit crisis back then, or in the 2 years after? Because it was taken off the table, likely because a Republican was in the White House at the time.

President Trump signed budget legislation which suspends the debt ceiling for two years [on August 1, 2019]. The Senate passed the deal, cut between the White House and Democratic congressional leaders, [the day before]. The budget will raise spending by $324 billion and would also suspend the debt ceiling until July 2021, eliminating the prospect of an ugly battle before the 2020 election.

The bill passed the Senate on a bipartisan basis with 67 yeas to 28 nays.

Last week, the House passed the two-year spending and debt limit deal 284 to 149, with 219 Democrats voting in favor and 16 voting against. Sixty-five Republicans supported the measure. However, some fiscal hawks in the Republican Party opposed the bill.

Did you catch the part where the debt limit was suspended until after the 2020 elections? They didn't even put a number on it! That numerical limit only came back on August 1, 2021 (here's a good resource on the debt limit increases in Trump's first 3 years in office).

Between August 2019 and August 2021, our deficits exploded, and our national debt went up by 29%, from just over $22.0 trillion to more than $28.4 trillion. And yet our dollar grew stronger and interest rates stayed low until the economy recovered and the Fed decided to slow inflation instead of pumping up asset prices helping the economy. So don't tell me that Republicans have any leg to stand on here, and that there is some urgent need to stop paying our bills because of some artificial number that was set 2 years ago.

Yes, our national debt is an obnoxious number, and there are needs to right-size some spending AND RAISE REVENUES. (how isn't any part of the 2017 GOP Tax Scam on the chopping block? Especially the giveaways to the rich and corporate?). But we should be discussing how to do so over the next 4 1/2 months, without a need to make any concessions on the current budget, paying our bills, and keeping people in jobs and making incomes.

INFLATION WATCH getting close to being put on the bank burner

April is proving to be another month where we might not need to be on INFLATION WATCH much longer.

Let's start with the Consumer Price Index report, which showed another month of moderate-but-controllable inflation.

Some good news on inflation: 4.9% (y/y) inflation is the lowest since April 2021.

Grocery prices have been falling for the past 2 months.
Electricity and natural gas also down past 2 months.

There's hope that rents will soon peak, but we're not there yet... pic.twitter.com/agKYpIjBCN

— Heather Long (@byHeatherLong) May 10, 2023

US CPI rose 0.37% in April and was up 4.93% from a year earlier

Six-month annualized change: +3.3%
Three-month annualized change: +3.2% https://t.co/qCgv5nEUrD pic.twitter.com/GPh43y2uwy

— Nick Timiraos (@NickTimiraos) May 10, 2023

If we're consistently at 3-4% inflation while average hourly wages are running at 4-5%, that sounds like a win to me. And that's reflected in the reality that since inflation peaked in June 2022, we've seen real wages go up in most months. Especially among line workers that aren't supervisors.

With those sizable losses from May and June coming off the 12-month totals in the near future, we likely will see year-over-year real wage gains that are in the 1-2% range. Pretty good place to be, at least for those of us with real jobs.

Then on Thursday, we got the report on inflation from the business side. And that looks even better.

Wholesale PPI inflation is now lower than it was five years ago. pic.twitter.com/RTN0GZTyGr

— Steven Dennis (@StevenTDennis) May 11, 2023

Going further up the supply chain, we see that producer prices are down over the last year, and have consistently fallen since last Summer.

So nothing to drive inflation from the producer side. If anything, prices should moderate even more.

And lastly, we got this release from the US Conference Board.

This “leveling up” of the labor market explains why some employers think nobody wants to work even when the share of the prime-age population working is at 20-year highs — the people in bad jobs got better jobs during the pandemic: https://t.co/dVRbABDnT0 pic.twitter.com/3eTnM9egBx

— Coin-er Sen 🪙 (@conorsen) May 11, 2023

Oh, that's why the Fed and related oligarchs aren't happy with the current situation. Can't have those plebes having the upper hand over the "job creators", now can we?

If oil/gas prices stay down, and food prices continue to level off, and the misleading "shelter" index moderates (an index that already doesn't account for the large number of us in fixed-rate mortgage payments, I will add), then we got a healthy economy with real wage growth, multi-decade low unemployment, and inflation that isn't causing economic damage. Why would we want to end the first two to fight a third 'problem" that doesn't even seem to be a problem at this point.

Tax season ended last month, and tax revenues did not come in.

I've said that I was concerned over what looked like a revenue shortfall for the Federal Government, but that I was going to wait until tax season ended and the April figures came in.

The Congressional Budget Office reported those numbers as part of their monthly budget review, and I am now concerned.

Total Receipts: Down by 10 Percent in Fiscal Year 2023
Receipts totaled $2.7 trillion during the first seven months of fiscal year 2023, CBO estimates— $299 billion (or 10 percent) less than during the same period a year before.

Receipts collected through April 2023, net of refunds, were about $250 billion less than CBO anticipated in February, when the most recent baseline projections were released. That decrease stems mainly from smaller-than-anticipated payments of individual and corporate income taxes, mostly for calendar year 2022. The reasons for the difference will be better understood as additional information becomes available, but one reason could be lower-than-expected realizations of capital gains last year.

Receipts ended up being $250 billion less than what was expected in February? UGH!

As you can see, the budget deficit for the 2023 Federal Fiscal Year started getting much larger than 2022's deficit in January, when tax brackets were indexed to account for 2022's high inflation , and the fiscal results from the tax-filing months of February, March and April ended up being very different compared to last year.

The same budget review also shows that the taxes withheld from paychecks are slightly higher, but it's the refunds and lack of payments that are blowing the hole in the revenue projections.

Amounts withheld from workers’ paychecks increased by $45 billion (or 2 percent). Those taxes are withheld from wages and salaries, including bonus income; the amount withheld depends on a taxpayer’s expected tax bracket.

• Nonwithheld payments of income and payroll taxes declined by $190 billion (or 23 percent) compared with the same period last fiscal year. That decline began in January and continued through tax-filing season, mostly reflecting a decrease in 2022 tax liabilities.

The spending side also is contributing to the deficit, even with the end of the expanded Child Tax Credit, with the Fed's decision to continue jacking up interest rates continuing to increases costs to pay off our debt.

The Medicaid costs will likely decline with the end of continuous enrollment and tens of millions of recipients having their status re-evaluated, and the Department of Education number will decline because it expensed all of the student loan relief into this year (which doesn't reflect the real change and benefits over time).

The deficit numbers are certainly worth discussing, especially with the revenue shortfall. But as I've said before, deficits only are an economic problem if it results in higher interest rates or a drop in the dollar that results in inflation. And I'd argue the higher interest rates have been artificially induced higher by the Fed more than any lack of desire to invest in US Treasuries, while inflation peaked when the deficit was lower in June 2022, and CPI has since moderated into a manageable 4% annual rate since then.

And even as GOPs trying to use the artificial debt ceiling to tank the economy, the US dollar has stayed strong, with the dollar index being stronger than it was when 2022 began, and well above where it was when the Biden stimulus became law in March 2021.

These deficit figures may be used by Republicans as their excuse to try to cause immediate budget cuts via the debt ceiling debate. But we've already allotted funds for those bills to be paid until September, and hack politicians don't decide if the Treasury can issue debt to pay those bills - the Treasury and the financial markets do. We can discuss what adjustments need to be made to the 2024 budget in August and September to deal with the increasing deficit, if you think it is a problem to deal with.

When those discussions happen, we better discuss ways to grow our flagging tax revenues. And that better include a look at the 2017 GOP Tax Scam that has a sizable role in our growing deficits and debt. Or else we're not being honest about why we're in this situation.